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Question 1:
Score 1/1
Your response
Correct response
Building a Balance Sheet
Romo, Inc., has current assets of $2,900, net fixed assets of $21,100, current liabilities of $2,400, and longterm
debt of $11,000.
(Omit the "$" sign in your response.)
The value of the shareholders' equity account for this firm is $
10600
(50%).
The amount of net working capital is $
500
(50%).
Building a Balance Sheet
Romo, Inc., has current assets of $2,900, net fixed assets of $21,100, current liabilities of $2,400, and lo
debt of $11,000.
(Omit the "$" sign in your response.)
The value of the shareholders' equity account for this firm is $
10600
.
The amount of net working capital is $
500
.
Feedback:
The balance sheet for the company will look like this:
Balance Sheet
Current assets
$ 2,900
Current liablities
$ 2,400
Net fixed assets
21,100
Longterm debt
11,000
Owners' equity
10,600
Total assets
$24,000
Total liablities & Equity
The owners' equity is a plug variable. We know that total assets must equal total liabilities & owners' equity. Total
liabilities and equity is the sum of all debt and equity, so if we subtract debt from total liabilities and owners' equity,
the remainder must be the equity balance, so:
Owners' equity = Total liabilities & equity – Current liabilities – Longterm debt
Owners' equity = $24,000 – 2,400 – 11,000
Owners' equity = $10,600
Net working capital is current assets minus current liabilities, so:
NWC = Current assets – Current liabilities
NWC = $2,900 – 2,400
NWC = $500
Question 2:
Score 1/1
Your response
Correct response
Building an Income Statement
Fyre, Inc., has sales of $576,000, costs of $270,000, depreciation expense of $75,000, interest expense of $49,000,
and a tax rate of 32 percent. The net income for this firm is $
123760
(100%).
(Omit the "$" sign in your
response.)
Building an Income Statement
Fyre, Inc., has sales of $576,000, costs of $270,000, depreciation expense of $75,000, interest expense
and a tax rate of 32 percent. The net income for this firm is $
123760
.
(Omit the "$" sign in your resp
Feedback:
The income statement starts with revenues and subtracts costs to arrive at EBIT. We then subtract out interest to
get taxable income, and then subtract taxes to arrive at net income. Doing so, we get:
Income Statement
Sales
$ 576,000
Costs
270,000
Depreciation
75,000
EBIT
$ 231,000
Interest
49,000
Taxable income
$ 182,000
Taxes
58,240
Net income
$123,760
Question 3:
Score 1/1
Your response
Correct response
Dividends and Retained Earnings
Fyre, Inc., has sales of $591,000, costs of $275,000, depreciation expense of $72,000, interest expense of $44,000,
and a tax rate of 32 percent.
(Omit the "$" sign in your response.)
If the firm paid out $65,000 in cash dividends, the addition to retained earnings is $
71000
(100%).
Dividends and Retained Earnings
Fyre, Inc., has sales of $591,000, costs of $275,000, depreciation expense of $72,000, interest expense
and a tax rate of 32 percent.
(Omit the "$" sign in your response.)
If the firm paid out $65,000 in cash dividends, the addition to retained earnings is $
71000
.
Feedback:
The income statement starts with revenues and subtracts costs to arrive at EBIT. We then subtract out interest to
get taxable income, and then subtract taxes to arrive at net income. Doing so, we get:
Income Statement
Sales
$ 591,000
Costs
275,000
Depreciation
72,000
EBIT
$ 244,000
Interest
44,000
Taxable income
$ 200,000
Taxes
64,000
Net income
$136,000
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This note was uploaded on 10/10/2010 for the course FIN 301 taught by Professor Andelin,stevenle during the Spring '07 term at Pennsylvania State University, University Park.
 Spring '07
 ANDELIN,STEVENLE
 Corporate Finance

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